Top ETFs for young investors to build that Million Dollar Portfolio - Best Growth ETFs!

Summary

In this video, Dave shares his investment advice for his younger self, focusing on ETFs to build wealth over time. He emphasizes the importance of staying invested, understanding market trends, and keeping costs low. Dave recommends a mix of tech-heavy ETFs like Vanguard’s VGT and VUG, along with more diversified options like the Schwab SCG and iShares IVV. He also stresses the significance of international exposure (VXUS) and cryptocurrency (FBTC) for portfolio balance. Dave advocates for a long-term, dollar-cost-averaging strategy, believing that consistent investment in quality ETFs can lead to financial success over the next 20-30 years.

Takeaways

• 😀 Invest consistently: Young investors should prioritize regular investing (weekly or monthly) to build wealth over time.
• 😀 Time in the market matters: Long-term investments in strong assets will generally lead to growth, with historical data supporting this approach.
• 😀 Embrace market corrections: Down markets, like bear markets or recessions, present ideal buying opportunities for young investors.
• 😀 Low fees are essential: Avoid ETFs with high fees, as they can accumulate over time and eat into your returns.
• 😀 Tax efficiency is key: Focus on tax-deferred accounts, and if using taxable accounts, select low-dividend ETFs to minimize tax impact.
• 😀 Vanguard's VGT is a solid pick: Vanguard's Information Technology ETF (VGT) has performed well with a low expense ratio and strong returns.
• 😀 Vanguard's VUG is another strong choice: The Vanguard Growth ETF (VUG) offers growth potential with a low expense ratio, though VGT has outperformed it.
• 😀 Vanguard's MGK offers another option: The Mega Cap Growth ETF (MGK) provides exposure to large tech companies, with impressive performance over the years.
• 😀 Schwab's SCG provides a similar growth strategy: Schwab’s Large Cap Growth ETF (SCG) offers competitive performance with a slightly lower expense ratio.
• 😀 The S&P 500 is a reliable, simple investment: IVV, which tracks the S&P 500, is an easy-to-understand ETF that has had solid long-term returns.
• 😀 International exposure matters: VXUS, the Total International Stock ETF, offers exposure to global markets, although its performance has been weaker recently.
• 😀 Bitcoin can be a small part of your portfolio: FBTC, a Bitcoin ETF, may serve as a hedge or insurance in a portfolio, with potential upside despite its volatility.

Q & A

What is the main advice Dave would give to his younger self regarding investing?

Dave would advise his younger self to focus on investing in ETFs consistently every week or month, stressing the importance of long-term growth through simple, steady investments.

What are the key rules Dave believes young investors should follow?

Dave's key rules for young investors include staying invested, understanding that the stock market trends upwards over time, embracing market corrections as buying opportunities, seeking low-fee ETFs, and prioritizing tax efficiency.

Why does Dave recommend investing during market downturns like bear markets or recessions?

Dave suggests that market downturns are beneficial for young investors because they can buy assets at lower prices, allowing for greater growth when the market rebounds.

What is the significance of low-fee ETFs, according to Dave?

Low-fee ETFs are crucial because high fees can eat into long-term returns. Dave emphasizes the importance of choosing ETFs with minimal expense ratios to maximize investment growth over time.

Why does Dave emphasize tax efficiency in investment strategies?

Dave emphasizes tax efficiency to minimize taxes on investment gains, especially for those using taxable brokerage accounts. By focusing on low-dividend, low-distribution ETFs, investors can defer taxes and optimize their returns.

What makes Vanguard's VGT ETF a good choice for young investors?

VGT is a good choice for young investors due to its low expense ratio of 0.1%, strong long-term performance, and its focus on high-growth tech stocks like Microsoft, Apple, and Nvidia.

How does Vanguard's VUG ETF compare to VGT in terms of performance and structure?

VUG has a lower expense ratio of 0.04% compared to VGT’s 0.1%. While both perform well, VGT has outperformed VUG in recent years. VUG holds fewer stocks and has a more balanced distribution among top holdings.

What are the benefits of investing in Vanguard’s MGK ETF?

MGK offers a low expense ratio (0.07%) and impressive returns, with a 10-year performance of 288%. It focuses on large-cap growth stocks similar to those in VGT and VUG, but with fewer holdings (85 stocks), making it more concentrated in top companies.

What makes Schwab's SCG ETF different from Vanguard's offerings?

SCG offers a slightly lower expense ratio of 0.04% compared to Vanguard ETFs. It also provides a similar stock mix to MGK but with a broader asset base, $25 billion, and has demonstrated impressive returns, including a 295% return over the last 10 years.

How does the S&P 500 ETF (IVV) fit into a long-term investment strategy?

The S&P 500 ETF (IVV) is ideal for investors looking for a simple, low-cost investment in the largest U.S. companies. Its expense ratio is extremely low (0.03%), and while it may underperform tech-heavy ETFs during certain periods, it offers broad market exposure and has historically provided solid long-term returns.

Why does Dave suggest adding international exposure with VXUS in a portfolio?

Dave recommends VXUS for international exposure because it provides diversification outside of the U.S. market, which can be beneficial for long-term growth. Although the international market has underperformed in recent years, it still adds a necessary global perspective to a portfolio.

What is Dave’s take on adding cryptocurrency to an investment portfolio?

Dave views cryptocurrency, specifically Bitcoin and Ethereum, as a small insurance policy within his portfolio. He suggests owning some Bitcoin through the newly launched Fidelity Bitcoin ETF (FBTC), though it is not a major portion of his overall strategy.